Disclaimer: This article is for informational purposes only and does not constitute financial advice.
📌 Key Research Highlights
- Broker: SK Securities | Rating: Buy (Maintained) | Target Price: 610,000 KRW (~$454.21 USD)
- 3Q26 Outlook: Operating Profit estimated at 106 trillion KRW (~$78.93B USD), reflecting a 18% QoQ increase.
- 2027 Forecast: Operating Profit forecast maintained at 568 trillion KRW (~$423.31B USD) despite lower FX assumptions.
- Core Thesis: Severe undervaluation (2027E P/E 4.2x) coupled with strong AI-driven memory fundamentals and sustainable shareholder returns.
Investment Thesis and Target Price
SK Securities maintains a Buy rating and a Target Price of 610,000 KRW (~$454.21 USD). The analyst asserts that Samsung Electronics is currently significantly undervalued, noting that the 2027E P/E ratio is only 4.2x despite the company possessing world-class profit-generating capabilities.
The valuation is further supported by a robust shareholder return policy. Assuming the current policy of returning 50% of Free Cash Flow (FCF) is maintained, returns are estimated at 193 trillion KRW (~$143.71B USD) for 2027 and 222 trillion KRW (~$165.30B USD) for 2028, representing approximately 11% and 13% of the current market capitalization (including preferred shares), respectively.
Earnings Estimates and Financial Preview
3Q26 Preview: Operating Profit is projected at 106 trillion KRW (~$78.93B USD), an 18% increase QoQ. This is a 4.5% downward revision from the previous estimate of 111 trillion KRW (~$82.65B USD), attributed to a lower USD/KRW exchange rate assumption (1,400 KRW vs. 1,450 KRW) and an expanded loss in the MX/NW division (-1.4 trillion KRW vs. -0.5 trillion KRW).
2027 Outlook: The 2027 Operating Profit forecast remains unchanged at 568 trillion KRW (~$423.31B USD), even with the exchange rate assumption lowered to 1,340 KRW from 1,440 KRW. This resilience is driven by:
- Memory Shipments: Expected growth of +22% for DRAM and +16% for NAND Flash.
- ASP Momentum: Expected increases of +38% for DRAM and +28% for NAND Flash.
- HBM: Strong ASP growth (+103% YoY) and shipment volume in 2027.
Divisional Performance: The DS (Device Solutions) division is strengthening, with Foundry utilization and orders rising due to AI demand. While short-term turnaround visibility for Foundry is limited due to performance bonuses, the overall trajectory is positive.
Key Semiconductor Drivers and Catalysts
- Memory Pricing: 3Q26 memory ASPs are expected to slightly exceed expectations, with DRAM +17% and NAND Flash +15%.
- Supply Constraints: Despite strong demand, shipments are constrained by inventory shortages and limited capacity due to the expansion of High Bandwidth Memory (HBM), with shipments projected at DRAM +4% and NAND Flash +7%.
- HBM Growth: HBM is expected to begin breaking quarterly record shipments.
- Market Structural Shift: The transition to a “Dual Market” (LTA-based contracts vs. Commodity market) is enhancing earnings visibility and the sustainability of shareholder returns.
- Foundry Recovery: AI-driven demand is leading to a simultaneous increase in Foundry orders and utilization rates, with a projected narrowing of losses.
🔗 Original Source: View the official filing/article here.